The Minimum Wages Act, 1948 stands as a cornerstone of India’s labour legislation, ensuring that workers receive fair remuneration for their efforts. It mandates that no employer shall pay wages below the prescribed minimum to employees engaged in certain scheduled employments. One of the most vital components of this Act is the procedure for fixation and revision of minimum wages, which aims to safeguard workers from exploitation.
This article provides a comprehensive view of the procedure for fixation and how the government revises minimum wages periodically, ensuring alignment with inflation and living standards.
Understanding the Minimum Wages Act, 1948
The Minimum Wages Act, 1948 was enacted to prevent the exploitation of labour by ensuring statutory fixation of minimum rates of wages. It empowers both the Central and State Governments to fix, revise, review, and enforce minimum wages in certain scheduled industries or employments.
The term “minimum wage” implies not just the bare subsistence level but also covers medical, educational, and housing needs of the worker’s family. The procedure for fixation ensures these wages reflect the current economic environment and cost of living.
Who Can Fix Minimum Wages?
Under the Act:
- The Central Government is responsible for establishments under its direct control like railways, mines, oil fields, major ports, and central public sector undertakings.
- The State Governments fix minimum wages for all other employments under their respective jurisdictions.
The Procedure for Fixation of Minimum Wages
The Act provides two distinct methods under Section 5 for the procedure for fixation and revision of wages:
1. Committee Method (Section 5(1)(a))
In this method, the appropriate government sets up committees and sub-committees to conduct inquiries and make recommendations regarding the fixation or revision of minimum wages. The process involves:
- Formation of advisory committees comprising representatives of employers, employees, and independent persons.
- Conduct of surveys, cost of living studies, and industry analysis.
- Submission of recommendations by the committee to the government.
- Final decision and notification by the government.
This method is considered consultative and participative, allowing all stakeholders to contribute to wage fixation.
2. Notification Method (Section 5(1)(b))
Here, the government drafts a proposal for wage fixation or revision and publishes it in the Official Gazette for public feedback. The process includes:
- Drafting proposed wages for specific scheduled employments.
- Publishing the draft in the Gazette, allowing a minimum of two months for stakeholders to raise objections or suggestions.
- Reviewing feedback and objections received from workers, unions, or employers.
- Final notification of the minimum wages by the appropriate government.
This method is faster than the committee method but may lack the same depth of consultation.
Revision of Minimum Wages
According to Section 3(1)(b), minimum wages must be revised at intervals not exceeding five years. However, the government has the discretion to revise it earlier if necessary.
Factors considered for revision include:
- Cost of living index
- Economic conditions of the region or sector
- Prevailing wage rates in the industry
- Recommendations from Labour Bureaus and Minimum Wages Advisory Boards
To ensure the real value of wages is maintained, Variable Dearness Allowance (VDA) is often added and revised biannually.
Minimum Wages Advisory Board
The Advisory Board, established under Section 7, assists the government in coordinating and advising on wage-related matters. It comprises:
- Employers’ representatives
- Employees’ representatives
- Independent persons (including women)
- A chairman appointed by the government
The Board plays a crucial role in shaping fair and practical minimum wage policies.
Coverage of Scheduled Employments
The procedure for fixation applies only to employments listed in the Schedule of the Act. Examples include:
- Agriculture
- Construction
- Mines
- Textile industry
- Domestic work (in some states)
Governments can add new categories over time to ensure broader coverage.
Enforcement and Penalties
The Act also provides mechanisms for enforcement and redressal:
- Inspectors appointed by the government ensure compliance.
- Workers can claim unpaid wages or file complaints for underpayment.
- Section 22 prescribes penalties including fines and imprisonment for violations.
Thus, the procedure for fixation is not merely bureaucratic but is backed by legal enforcement.
Recent Developments
The Code on Wages, 2019, which seeks to consolidate and simplify wage-related laws, subsumes the Minimum Wages Act, 1948. It expands the definition of wages and coverage across all sectors and not just scheduled employments.
While the procedure for fixation remains largely similar, the Code introduces a national floor wage concept to reduce regional disparities.
Significance of the Procedure for Fixation
The procedure for fixation under the Minimum Wages Act plays a crucial role in:
- Preventing forced and exploitative labour.
- Providing workers a basic standard of living.
- Supporting social justice and economic equality.
- Enforcing Article 43 of the Indian Constitution, which directs the State to ensure a living wage for all workers.
Without this legal framework, informal and unorganised sectors would remain unprotected and vulnerable.
